2021 first half-year results
Bekaert delivers superior performance
All-time high H1 sales and uEBIT • uEBIT of € 285 million or 12.4% margin on sales • net debt/uEBITDA of 0.69
Bekaert achieved strong sales and vigorous margin growth in the first half of 2021. This performance was achieved on the back of a volume rebound to pre-Covid-19 levels, an overall stronger business portfolio, the lasting impact from the implemented improvement programs, and a significant pricing and inventory valuation impact from raw material price increases.
Financial highlights H1 2021
• Consolidated sales of € 2 306 million (+33% ) and combined sales of € 2 782 million (+39%2)
• Underlying EBIT of € 285 million, generating a margin on sales of 12.4%, up 7.2 ppt from H1 last year
• Underlying EBITDA of € 376 million, generating a margin on sales of 16.3%, up 5.3 ppt from H1 last year
• Underlying ROCE of 26.9%, compared to 7.7% in H1 2020
• EPS of € 3.66 per share, versus € 0.59 last year
• Working capital of € 667 million or an average working capital on sales of 13.0%, significantly below the average of H1 (20.1%) and FY 2020 (16.4%), despite the impact from wire rod price increases
• Solid Operating Free Cash Flow of € 155 million (versus € 61 million in H1 2020) driven by higher profitability
• Net debt of € 519 million, € -436 million down from € 955 million as at 30 June 2020, and a further decrease (€ -85 million) from the close of 2020. This resulted in a net debt on underlying EBITDA of 0.69, down from 2.46 on 30 June last year and 1.26 at year-end 2020.
Focus and effectiveness of our actions
Our actions have been geared towards three main areas, which have contributed each about one third of the year-on-year underlying EBIT improvement
• Volume recovery to pre-Covid-19 levels, enabled by:
- Capturing the opportunities from the global demand rebound
- Driving growth through a customer-centric and go-to-market strategy and focus
- Securing supply chain excellence to ensure delivery continuity to customers worldwide
• Structural improvement of the overall Bekaert performance:
Driving further performance improvements across the Group, through:
- Product and business mix improvements, in line with our strategy to upgrade the business portfolio
- Pricing discipline aligned with raw material price evolutions
- Acceleration of our commercial and manufacturing excellence programs
- Continued effective working capital and cost control
As a result of these improvement actions, all four business units delivered an underlying EBIT margin between ~10% and ~17%.
• Seizing the opportunities from temporary tailwinds:
- Positive non-cash inventory valuation impact of raw material price increases
- Excluding the H1 2021 inventory valuation impact, the underlying EBIT margin would have reached approximately 10%.
Market developments
Demand from tire markets was very strong at a global level throughout the first half of 2021. Demand in China started to tail off in June 2021, linked to lower export business for Chinese tire makers as a result of container shortage and fiscal policy reforms. This was partly compensated by a demand rebound in North America and surging demand in EMEA and India. Demand from OEM automotive markets rebounded, though not yet to pre-Covid levels as a result of the global chip shortage.
Demand from construction and infrastructure markets was strong throughout the first half in Latin America, and progressively improved in the rest of the world. Stimulus programs have supported demand and the ongoing de-globalization trend has been beneficial, as a global player with a strong foothold in all continents.
Demand in energy & utility markets was strong, with positive evolutions for the flexible pipe armoring and overhead power cable business, improved order books and project wins for ropes, and opportunities in hydrogen power and other renewable energy markets.
Agriculture, fishing & marine, and mining markets remained solid with good sales volumes for our steel wire and ropes business. The global industrial recovery also boosted demand for Bekaert’s hose reinforcement and filtration solutions.
2021 Outlook and mid-term ambitions
We project good demand in most markets in the second half of the year but we take into account the usual seasonality effects and remain cautious about supply chain interruptions and other challenges posed by the Covid-19 pandemic.
We project the positive inventory valuation impact to trend down significantly in the second half due to an anticipated stabilization in raw material prices as of the fourth quarter of 2021 onwards.
The underlying EBIT of the second half will therefore be lower than the first half of 2021 and is projected to approximate or exceed the solid level of the second half last year.
Barring unexpected events, Bekaert projects for FY 2021 an underlying EBIT margin on sales of 10% or better and sales of approximately € 4.6 billion.
| FY 2021 | Consolidated sales | Underlying EBIT margin | Net debt leverage |
| Restated guidance | ~ € 4.6 bln | ³ 10% | <1.0 |
Following a review of our five-year strategy plan, we also raise our ambitions over the mid term (2022-2026) with an underlying EBIT margin ambition level of 9% to 11% through the cycle. Our ambitions to achieve organic sales growth of 3%+ CAGR and deliver a FCF yield (on net result) of ~100% remain unchanged.
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